Aa.2 Use this information for the next two problems. HCB Inc. purchased a Bamabeater Deluxe for $150,000including shipping and installation. The equipment falls in the 5-year MACRS depreciation class, withdepreciation rates given below. VOLS sold it after 3 years for $40,000. VOL's tax rate is 25%.Year12356Depreciation %20.00%32.00%19.20%11.52%5.76%1. Calculate the book value of the machine when it is sold.a.b.C.d.e.32,45735,70239,27343,20047,520411.52%

The book value of an asset is the carrying value of an asset recorded in the balance sheet.. It is…

Answered: Use this information for the next two…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 44P

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Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last for ten years, Alfredo knows the technology will become old quickly, and so they plan to replace this printer in three years. At that point, Alfredo believes it will be able to sell the printer for $15,000. Calculate yearly depreciation using the double-declining-balance method.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?
1. A special manufacturing and handling device was purchased by Alfonso Manufacturing for $200,000 and is depreciated over MACRS. CFBT is estimated to amount to $800,000 for the first 2 years followed by $600,000 thereafter until the asset is retained. The effective tax rate, Te is 35% and interest is 10% per year. In present worth dollars determine the CFAT and determine if it was a viable purchase. (Note answer must be in a tabular format)
The Galley purchased a property two years ago at a cost of $19,800, and the firm uses a three-year straight line depreciation method. The firm no longer uses this property so is selling it today at a price of $13,500. What is the amount of the pretax profit on the sale? A. 11140.48 B. 6900 C. 10500 D. 10702.4
XL Co. owns a machine purchased a machine 4 years ago for OMR 80,000. The accumulated depreciation on the machine to date is OMR 32,000. Depreciation rate is 10% per annum straight line method. XL Co. can sell the machine to another manufacturer for OMR 50,000. In order to make the sale, XL Co. must incur a transportation cost of OMR 2000. If XL Co. replaces the machine with a new version, it would cost OMR120,000. The cash flows from existing machine are estimated to be OMR 25,000 for the first two years and OMR 20,000 for the remaining 4 years of the machine’s life. The discount rate at 10 % is: - Year -1 0.909, Year -2 0.826, Years- 3 to 6 inclusive 2.619 (annuity rate) Calculate the value of machine under the four methods identified in the four possible measurement bases with clear steps and calculations .
AP Company purchased a Machine at cost of $150,000 on Jan 1, 2015. This machine falls under MACRS 5-Year property. AP pays tax at 38%. This machine was sold on Dec 31, 2018 at $32,000. What is the after-tax salvage value? Relevant Depreciation Table Dep Year Rate 1 20.00% 2 32.00% 3 19.20% 4 11.52% 11.52% 6. 5.76% a) $29,689.60 b) $25,920.00 c) $19,840.00 d) $23,123.20
Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 20% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $450,000 2 500,000 3 570,000 4 700,000 5 820,000 6 950,000 What is Infinity's deferred tax asset or deferred tax liability at the end of year 3? Group of answer choices $38,160 deferred tax liability $2760 deferred tax liability $2760 deferred tax asset $38,160 deferred tax asset PreviousNext
Infinity Production acquired a new machine at the beginning of the current year. The machine cost $900,000 with no residual value expected. Infinity uses the straight-line method for financial reporting, assuming a 6-year useful life. The firm classifies the equipment as 5-year MACRS property for tax purposes using the following percentages. Year MACRS (%) 1 20.00% 2 32.00 3 19.20 4 11.52 5 11.52 6 5.76 The company is subject to a 25% income tax rate and has no other book-tax differences. Income before depreciation and tax is presented below: Year Income before Tax and Depreciation 1 $370,000 2 420,000 3 490,000 4 700,000 5 820,000 6 950,000 What is Infinity's income tax expense for year 1?
North Ltd. purchased a building in 20X5 for $1,200,000. Straight-line depreciation was used, with a useful life of 40 years and a residual value of $200,000. A full year of depreciation was charged in 20X5. In 2008, the company decided to switch depreciation methods to declining balance, using a rate of 10%. The tax rate is 30%. Required: 1. Assume this is a change in estimate, and calculate 20X8 depreciation expense. Depreciation expense $112,500 2. Assume this is a change in policy, and calculate 20X8 depreciation expense and the cumulative effect of the change on 20X8 opening retained earnings. Depreciation expense $ 240,000
Troy Industries purchased a new machine 4 year(s) ago for $80,000.It is being depreciated under MACRS with a 5-year recovery period using the schedule attached.Assume 21% ordinary and capital gains tax rates. a. What is the book value of the machine? b. Calculate the firm's tax liability if it sold the machine for each of the following amounts: $96,000; $56,000; $13,600; and $9,500.
Exactly 10 years ago, Boyditch Professional Associates purchased $100,000 in depreciable assets with an estimated salvage of $10,000. For tax depreciation the SL method with n = 10 years was used, but for book depreciation, Boyditch applied the DDB method with n = 7 years and neglected the salvage estimate. The company sold the assets today for $12,500.a. Compare this sales amount with the book values using SL and DDB methods.b. If a salvage of $12,500 had been estimated exactly 10 years ago, determine the depreciation for each method in year 10.

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